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We had them purchased from a JV company to ease their cash flow. We intend to sale the property too. How to classify in a subsidiary and consolidated financials. Once construction starts, what shall be the treatment (Journal entries) and when we sale with a gain, how to recognize gain,and derivation of CGT according to pakistan law (Villas current value being Rs.300 mil and we foresee to sell them for over500 mil)
Your question is not clear enough. Has you company bought Land and partially completed property or just contracted to construct on third party's behalf?
If your organization's normal course of business is not construction, then the asset will be treated according to IAS16 until the completion of construction.
As for the CGT, it depends upon the period of time to realize the gain. The longer it takes to realize gain, the lower CGT will be. CGT will be charged on selling price - purchse value and the tax rate for the gain will be determined at the time of realization of gain.
I hope this helps you.
Wonderful question brother..
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